The Consumer Financial Protection Bureau (CFPB) recently filed a lawsuit against the ringleaders of a robo-call phantom debt collection operation, their companies, and their service providers.

These companies based in Buffalo and Atlanta made millions of debt collection robo-calls to consumers in several states. The calls were designed to take advantage of innocent, uninformed and inexperienced consumers; some either did not owe anything or the statute of limitations on an old debt of theirs had expired. This is one good example of why consumers with credit card debt they cannot afford to pay need to prepare for contact with debt collectors.

According to the CFPB’s press release, “The CFPB alleges [these] individuals and entities threatened, harassed, and deceived consumers in order to collect phantom debt. Phantom debt is debt consumers do not actually owe or debt that is not payable to those attempting to collect it. . . . [The parties] used many fictitious names as they threatened consumers with arrest, wage garnishment, and ‘financial restraining orders.’”

The CFPB’s complaint alleges that consumers were tricked into believing that the collectors were legitimate because the collectors verified consumers’ personal information such as date of birth, social security number, the names of family members, and employment information. According to the complaint, [The parties] purchased consumers’ personal information from debt brokers and lead generators. They then used a telemarketing firm to automatically broadcast robo-calls to millions of consumers. The calls alleged that the consumer had engaged in check fraud and threatened to contact the consumer’s employer.

In response to the debt collectors’ threats and false statements, consumers provided credit or debit card payment information. The complaint alleges that once the debt collectors got consumers’ payment information, they would submit it to the payment processors, who enabled the collectors to access consumers’ bank accounts to withdraw money, despite the many indications of misconduct.

According to lawyersandsettlements.com, “There are a host of rules and regulations that bill collectors must observe in order to pursue a debt legitimately, and consumers have certain rights under the Consumer Financial Protection Act and the Fair Debt Collection Practices Act.” The Telephone Consumer Protection Act (TCPA) also provides consumers specific protection against robo-calls, calls using automatic dialers, and automated messages. It applies to calls received on cell phones as well as land lines.

Here is how both scary and phony a credit card debt robocall to a consumer can be.

Consumers with credit card debt they cannot afford to pay can learn two things from this report. First, never give a stranger your bank account or other personal identity information over the telephone. Second, always dispute a debt collector’s claim and ask for written verification as the Fair Debt Collection Practices Act allows.